Industrial Espionage: From Dumpster Diving to the NSA

A far cry from the dumpster diving in Silicon Valley for trade secrets, the Internet has provided opportunities and mechanisms that boggle the mind - and it seems that no major country is immune to attack, or to accusation.

Shortly after I moved to Silicon Valley a lifetime ago, I heard of several cases where garbage dumpsters were being dived -- no, not for food, but for trade secrets, and find them they did. Fast-forward 30 years, and accusations of industrial espionage are still in the news, most recently involving BMW, Brazil, Germany, France, and many US companies.

In Paris, Bolloré, the investment firm behind Autolib, a car-sharing company that has battery-powered cars for public use on a subscription basis, along with a network of parking and charging stations, is accusing BMW of using spies for information on its electric cars. The company charges that two employees of a firm employed by BMW were seen multiple times tampering with charging points and the company's vehicles. Bolloré claims that it has advanced battery and geo-location system technology that it has invested heavily in. BMW states that the workers are employed by P3, an engineering firm that is conducting routine tests to check charging point compatibility on European roads. BMW wanted that information before its launch of the i3 electric model.

According to the news account, the individuals accused of tampering were actually taken in for questioning by the police after being seen three times at the recharging stations, then released. The scheme is catching on, with 1,800 vehicles, 4,000 charging points, and approximately 34,000 subscribers in Paris and suburbs -- good reason to unearth competitive information.

While this case represents a typical goal -- find out what they're doing, how they're doing it, and use the information to do it better, cheaper, faster, to take over the marketplace -- other cases in the news are more sinister.

At the forefront of many of the industrial espionage charges today is the US National Security Agency. According to a Bloomberg report, the NSA hacked into the Petroleo Brasileiro network just as Brazil is preparing to auction off rights to tap into the largest oil fields in the world, located off of its Atlantic coast.

These charges, according to Reuters, are not the first time the NSA is accused of spying. Information disclosed by Edward Snowden indicates that the NSA spied on Internet communications in Brazil, even involving email and phone calls of Brazil's president, Dilma Rousseff.

The NSA, naturally, is stating that any communications it intercepted were only due to terrorism concerns, but a public statement by Rousseff counters that claim: "If the facts reported by the press are confirmed, it will be evident that the motive for the spying attempts is not security or the war on terrorism, but strategic economic interests," she said, claiming that such espionage and interception of data were illegal and had no place between the two democratic nations.

The NSA is also claimed to have tapped into systems operated by France's foreign ministry and the Society for Worldwide Interbank Financial Telecommunication, an international bank cooperative known as Swift through which many cross-border financial transactions take place. Right up there with NSA wrongdoing accusations are those against China.

A recent case involves the Sinovel purchase of wind turbine controllers from AMSC. Sinovel then began to stop taking shipments of the technology. On a fact-finding mission attempting to find out why there was a turbine malfunction, it was found that AMSC's proprietary source code was smack dab in the hands of the Chinese -- so the firm was no longer needed.

In addition, the Chinese have been accused in espionage cases spanning biotech, telecom, nanotechnology, and clean energy. Engineers from both Apple and Ford were convicted of providing designs and pricing information to China, and NASA testified to Congress that Chinese hackers tapped into sensitive files at the Jet Propulsion Laboratory. Several companies have been hacked, allegedly by the Chinese, including Yahoo, Google, Symantec, Dow Chemical, and Adobe.

In a recent survey conducted by Ernst and Young, the US is now seen as a dangerous place. The number of German IT and security professionals that consider it to be dangerous jumped from 6 percent in 2011 to 26 percent in 2013. China was ranked as the riskiest country, followed by the US and then Russia, at only 12 percent.

A far cry from the dumpster diving in Silicon Valley for trade secrets, the Internet has provided opportunities and mechanisms that boggle the mind -- and it seems that no major country is immune to attack, or to accusation. It also is fairly clear that given the information that employees put on their own Facebook and other social media pages as to what they're working on, replete with details, data mining efforts might not have to dig very deep to find at least the first layer of secrets.

So, industrial espionage is probably just as common as insider trading. As it affects the standing of the US globally, how do you feel about recent occurences?

The teacher who ran the electronics club that both Steve W. and Steve J. belonged to in high school routinely took the students for dumpster runs in the Valley to scavenge for scraped electronic parts. So it is indeed a time-honored tradition!

Well, you are correct, this is really common. Dumpster diving is nothing new. According to a close source who I shared this article with... the source laughed out loud. The source stated that they fulfill the act of dumpster diving on their competition all the time. As a matter of fact, the source went on to say that they hire people to dress like they are homeless to help with the process. Facebook and the others are good, but why waste time with that when you can go for the real thing....dumpster diving.

In the postal automation / postal automation arena the sequence numbers of automated postage vending machine receipts (and print to order stamps) have been used by collectors for years to determine the number of transactions at newly placed kiosks. Likewise, stamp journals publish the serial numbers of postage meter placements each month which permit determination of the relative numbers of units being placed by competing companies. A good understanding of a system often makes it possible to obtain unexpected insights into the competitive landscape.